'Restaurants will not be able to continue the way things are going': Cork restaurateurs warn of further closures in sector

Restaurateurs in Cork have warned that there “will be more closures” within the industry as operational costs have “skyrocketed”.

It comes as 48 restaurants, cafés, and other food-led businesses across the country were forced to close in November, according to the Restaurants Association of Ireland, with concerns expressed by local business owners in the sector that they are facing “a perfect storm”.

Speaking to The Echo, Paul Walsh, who runs the 3 Little Piggies café on Union Quay, said he was not surprised by the closure levels.

“Everyone in the catering sector is seeing their margins disappear, and when the minimum wage goes up in the new year, people will pay more at tills,” he said.

“That, or businesses will reduce employees’ working hours to reduce costs.

“If I was offered a choice now of working for someone else or opening my own business, I’d work for someone else.

“It’s getting harder and harder to balance the books.”

Mr Walsh said he feels there is “no encouragement in this country to open a small business anymore”.

Mr Walsh also fears that “a lot more businesses will fold next year as margins reduce again”.

Publishing its November closures list, the RAI also cited a recent Bord Bia report which found consumers are eating out less often.

RAI chief executive Adrian Cummins said food-led businesses are coming under increasing pressure amid increased costs and reduced consumer demand.

“What we are being told by restaurant and cafe owners is that this year’s busy Christmas season will not be enough to keep the doors of many food-led businesses open through 2024,” he said.

Mr Cummins said businesses in the sector are facing into higher costs next year and that the Increased Costs of Business Scheme, announced by the Government as part of the budget, “will prove insufficient for many restaurants and cafes struggling to stay viable in the coming months”.

“If the Government fails to take swift and decisive action, including the return of the 9% Vat rate for food-led businesses, then the alarming level of closures we are already witnessing will only be the tip of the iceberg,” he said.

The Vat rate for tourism, hospitality, and some other services returned to 13.5% in September. It had been at 9%, with the lower rate introduced during the covid-19 pandemic.

Proprietor of Sage restaurant in Midleton, Kevin Aherne, said other costs have increased also since the Vat rate went back up, including food costs, which he said he has seen rise by 4% in the last three months alone.

“We’re constantly having to think outside the box, we’re constantly having to diversify in our offering and what we’re doing — bringing back an early bird menu to try and entice more customers,” said Mr Aherne. 

“You can’t put up your prices any more because all you’re doing is pushing people away… you’re trying to get more business in the door but it’s very difficult to get more business in the door because of the cost of living.

“Restaurants will not be able to continue the way things are going. There are going to be more closures.”

Owner of The SpitJack restaurants in Cork and Limerick, Richard Gavin, said the sector is experiencing a “perfect storm”.

“We’ve certainly seen a slowdown in trading month-on-month versus last year. Our year started strong, we were trading ahead, and then it really kind of plateaued and then since September you start to see spend is down with customers, footfall down with customers,” he said.

Mr Gavin, who is also at the helm of the Brown’s Brasserie brand in Cork, Dublin, and Limerick, described the return of the higher Vat rate as “a real killer blow” . He called for a more “dynamic” approach to Vat and said that independent restaurants and cafes should be treated differently to hotels.

“What I would ask for is that independent restaurants that have no other means of income except for people walking through their door that they [Government] should be able to very quickly do something to support people in January.”